The Centers for Medicare and Medicaid Services has shown that financial incentives offered to healthcare providers to improve patient care do enhance clinical quality and can slow the growth of Medicare costs.

CMS supplied results from three healthcare demonstrations, which included the use of electronic health records (EHRs), for small and solo physician practices, large physician practices and hospitals.

The pilots give CMS the opportunity to work closely with providers to improve quality and efficiency, and their lessons help shape Medicare policies, said Dr. Donald Berwick, CMS administrator.

"Based on what we have learned so far, we know the healthcare industry can meet high standards for improving quality of care while saving Medicare money," he said in a Dec. 9 announcement about the results.

CMS will start paying billions in incentives in 2011 to eligible physicians and hospitals that meet the requirements for meaningful use of certified EHRs under the HITECH Act.

More than 500 small and solo physician practices who participated in the Medicare Care Management Performance demonstration, now in its second year, will receive payments for their performance based on 26 quality measures, which focus on preventive care and care for patients with chronic conditions.

The goal is to demonstrate how the adoption of health IT can improve the quality of care for Medicare patients with chronic conditions.

CMS will pay $9.5 million in incentives to practices in California, Arkansas, Massachusetts and Utah. The average payment per practice is $18,100, but some practices earned as much as $62,500, Berwick said.

CMS will pay an additional bonus to 26 percent of the practices that reported their data using EHRs certified by the Certification Commission for Health IT, an organization which at the program's inception was the sole certifier.

The 10 larger physician groups participating in the Physician Group Practice demonstration attained benchmarks in their performance on at least 29 of the 32 measures reported this year, the fourth year of the pilot to improve preventive and chronic care delivery. The practices also have increased their quality scores over the life of the demonstration in measures related to diabetes, heart failure, coronary artery disease, hypertension and cancer screening.

Five physician groups will receive performance payments totaling $31.7 million as part of their share of $38.7 million of savings generated for the Medicare Trust Funds this year. CMS will transition the physician groups into the shared savings program established under the health reform law.

The Hospital Quality Incentive demonstration, which is sponsored by Medicare in partnership with Premier Healthcare Alliance, a national health care performance improvement organization, has reported improved results across the board in participating hospitals over each of several years.

CMS also found that hospitals that did not participate in the pilot enhanced quality as a result of reporting quality information on the agency's Hospital Compare Web site.